The paper "The Bank of England Challenges" is a great example of a finance and accounting assignment. “ The Bank of England's two core purposes are monetary stability and financial stability. Monetary stability means stable prices - low inflation - and confidence in the currency and financial stability entails detecting and reducing threats to the financial system as a whole” (Source: Bank of England http: //www. bankofengland. co. uk/monetarypolicy/index. htm) Prepare a report explaining in relation to the UK. 1) How the rate of inflation has affected interest rates over the last five years? The Bank Of England was given the responsibility of managing interest rates, currency exchange rate levels, and also attempting to manage inflation rates during the early 1990s (Bannock, Baxter, & Davis, 2003 p. 21).
At that point, the Bank Of England was not fully independent of interference from the British government when it came to the setting of interest rates, lowering inflation levels, or indeed the management of currency exchange rate levels with other major currencies such as the Euro and the US$. Aside from the British government, membership of the European Union has played a role in the Bank Of England’ s decision-making processes in relation to interest rates and currency exchange rate levels in the last five years (www. bankofengland. co. uk/monetarypolicy/index. htm). At the beginning of the five years period being studied here, it seemed that the Bank Of England had managed to use interest rate levels to maintain low inflation levels, strong economic growth as well as a stable level of currency exchange rate levels (Bannock, Baxter, & Davis, 2003 p.
21). British governments had previously found it very difficult to achieve such economic balances for more than limited short– term periods if at all.
British governments had either achieved higher levels of economic growth with increasing levels of inflation or had controlled the levels of inflation at the cost of lower rates of economic growth.
Bannock G, Baxter R E, & Davis E, (2003) Dictionary of Economics, 7th edition, Penguin, London
Nicholson M (2002), International Relations – A concise introduction 2nd edition,